New directors for NAB

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National Australia Bank chairman Graham Kraehe yesterday announced the appointment of four new directors and said the foundations were now in place to "rebuild the value and reputation" of the nation's largest lender after seven months of turmoil that have stripped more than $12 billion off its value.

The new directors, intended to provide a mix of technical, practical and strategic skills, come on top of three major executive appointments intended to rejuvenate the bank's structure and status.

Robert Elstone, a leading derivatives trading and risk expert and managing director of SFE Corporation, the holding company for the Sydney Futures Exchange, will be joined by commercial lawyer Danny Gilbert, ANZ Bank veteran Paul Rizzo and banking regulator Jillian Segal, a former deputy chairman of the Australian Securities and Investments Commission.

Earlier this week former Citigroup Australia chief executive Ahmed Fahour was appointed to the new role of chief executive officer Australia, and former Commonwealth Bank senior executive Michael Ullmer was made group chief financial officer.

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Mr Kraehe, whose own job has fallen victim to the boardroom brawling that forced the renewal process, said top management was "very positive" about the appointments and the outlook for the bank.

He dismissed market criticism that the bank could have made a mistake by changing its structure before defining its strategy, a break with the traditional path for a large organisation.

Mr Kraehe said: "What we have done makes absolute sense. The management team has decided that running our Australian business as one regional operation was the best organisational structure for Australia. Mr Fahour will work to evolve the timing and detailing of the structure. The key role is Australia, which is about bringing together the corporate and institutional bank and the Australian operations of wealth management."

He also defended Mr Fahour against attacks from within the banking industry that his background as a strategist ill-equipped him for the complex operational issues he faced.

"His last four years with Citigroup are exactly relevant to the role," he said.

But the bank won praise for its innovative mix of three executive and nine non-executive directors, an arrangement that could allow the executive directors to exercise "significant influence", according to analysts.

Mr Kraehe said the mix -
which is more common on British boards - provided "the right balance, not too large but enough to give us the right balance of skills".

The massive damage done to NAB's value and reputation during the past seven months means the new management - with Mr Fahour and Mr Ullmer being paid significantly more than their peers at other Australian banks - will be under pressure to achieve one of the biggest corporate turnarounds in Australian history.

Group chief executive John Stewart, who was appointed in January as the bank spiralled into the worst crisis of its 187-year history, yesterday repeated that he was here "for the peace, not the war".

Mr Stewart also appeared to rule out the rumoured sell-off of the bank's struggling European operation.

NAB ended the day up 12 ¢ at $26.20, the best performing of the major banks.